I have Rails application deployed on my home root directory of a domain and symlinked with my public_html/applicationname.com/. I wanted to install wordpress in applicationn
You should put your blog into the rails' public directory.
That's the place for static files (and php ones are).
This article may be useful to anyone looking to solve this problem: http://www.spotscore.com/blog/2009/11/22/how-to-host-wordpress-and-phusion-passenger-rails-app-on-the-same-domain/
Check the post :
http://joomlist.com/2011/10/php-in-subdirectory-of-rubyonrails/. it worked using passenger with apache.
If you are deploying your rails app using Passenger then you can disable Passenger for a particular location. See section 5.8 of the documentation, which has an example for WordPress.